"We're buying what has been beaten down and selling what was winning," said Peter Boockvar, equity strategist at Miller Tabak. "We're bottom-picking the financials on a sigh of relief that no shoes, or news, dropped at the Merrill [Lynch] conference," Boockvar said of the financial services event at which Goldman Sachs' chief executive spoke.

'It's not today that is most important, but whether there is any follow through.'

Peter Boockvar, Miller Tabak

"The question is not whether we're getting a bounce and everything is fine; the question is whether this is just a one-day event. It's not today that is most important, but whether there is any follow through," Boockvar said.

Snapping an extended four-day losing streak, the Dow Jones Industrial Average
DJIA, +0.36%
climbed 319.5 points, or 2.5%, to 13,307.1, with all but one of its 30 components ending higher, led by financials, including JPMorgan Chase
JPM, -0.44%
up 6.3%.

Stocks continued to climb as the National Association of Realtors reported its index of contract signings on existing homes fell to 85.7 in September from the year-ago reading of 107.6. But the data was up slightly from August, and beat expectations of a 1% decline.

Sectarian rise

Financial stocks also advanced, helped by Goldman Sachs
GS, -0.60%
CEO Lloyd Blankfein, who told a New York conference that the Wall Street powerhouse would not be taking any significant charges to write off losses on its subprime mortgage market position. See full story.

Drug stocks also moved higher, as Nektar Therapeutics
NKTR, +1.78%
jumped nearly 4% following news Pfizer Inc.
PFE, +2.41%
would pay Nektar $135 million for discontinuing sales of their jointly developed insulin product Exubera, which has posted anemic sales.

Gold futures extended their losses, falling $8.70 to end at $799 an ounce, its first finish below $800 since Nov. 1. See Metals Stocks.

The dollar gained on the yen but slipped against other major rivals, with the greenback buying 110.29 yen, compared with 109.38 yen late Monday. The euro was at $1.4603, compared with $1.4530 Monday. Read Currencies.

More than 1.6 billion shares traded on the New York Stock Exchange, and advancing stocks outran those declining more than 5 to 1. On the Nasdaq, 2.7 billion shares exchanged hands, and advancing stocks topped declining issues more than 2 to 1.

Big-box retailers

Wal-Mart's near 8% profit growth in the third quarter topped analysts' estimates, with results from the globe's biggest retailer indicating that heavy discounts during the period did not dent margins, a positive signal for the remainder of the year. Read more.

While Wal-Mart's results offered a glimmer of hope to investors, one analyst believes Wall Street might be reading too much from them.

The numbers "slowed improvements because of cost-cutting, not because of huge increased sales," said Michael Farr, president of Farr, Miller & Washington. Listen to Farr.

Home Depot Inc.
HD, +0.00%
reported third-quarter income dropped an expected 27% amid ongoing weakness in the housing market. The nation's biggest home improvement retailer also cut its forecast for the year. See full story.

Weekly chain-store sales last week rose 2.7% from a year-ago, but fell 0.5% from the week before, according to the International Council of Shopping Centers and UBS Securities.

For the month, ICSC expects industry same-store sales to increase by about 2.5%.

Vodafone Group PLC
VOD, +0.34%
just beat consensus forecasts in reporting its return to profit in the first half of the fiscal year, with the world's top mobile operator by revenue also lifting its annual outlook. Read more.

Overseas, European shares moved off their lows in afternoon trade, as gains for telecom shares in the wake of Vodafone's well received earnings. See Europe Markets.

Asian markets ended on a mixed note after a volatile session sent several indexes swinging between positive and negative territory. Read Asia Markets.

Stocks were due for a reversal after a volatile session Monday, which had the Dow moving up more than 100 points before closing below the 13,000 level for the first time since the middle of August.

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